Is This The End Of The Rally In Financials?

The Dow Jones Industrial Average could very well hit the 20,000 miles-tone on Wednesday, which naturally poses the question of whether it is time for stocks across all sectors to take a breather.

During Tuesday's edition of Benzinga's PreMarket Prep, Joel Elconin and Dennis Dick examined financial stocks and questioned if the rally has come to an end.

Dick noted that financial stocks as a whole started to "peel back" over the past few days after a brief pause in the Trump-induced rally.

For example, Dick pointed out that shares of Bank of America Corp (NYSE: BAC) rallied to the $23.00 per share level but stagnated throughout Thursday and Friday's trading session. On Monday, the stock started to decline, and the selling momentum carried over into Tuesday's session.

Scott Redler: 'No Reason To Be Short'

Scott Redler, the chief strategist for T3 Live/T3 Trading Group, was a guest on the PreMarket Prep show to share his expert take on financial stocks.

Redler is a firm believer in a basic principle: If a stock is hovering above its 21-day moving average, then investors should be bullish. Redler noted that shares of Bank of America have indeed traded above its 21-day moving average for quite some time, so there is "no reason to be short" the stock for the long term.

Redler believes the rally in financial stocks will continue into next year, although there may be some profit taking in January for tax purposes as opposed to selling in December.

At last check, Financial Select Sector SPDR Fund (NYSE: XLF) was down 0.32 percent on the day at $23.50 and up 5.83 percent over the last month.

Listen to the full discussion in the clip below.

PreMarket Prep is a daily trading ideas show that focuses on technical analysis and actionable short term trades. You can listen to the show live every morning from 8–9 a.m. ET here, or catch the podcast here.